published_or_final_version / Urban Studies / Master / Master of Social Sciences

This study analyzes the evolution of the regime governing private international trade law from its inception in the eleventh century through to its modern formulation in the twentieth century. It also seeks to explain its development by focusing on three theories of international relations. The regime is defined in terms of its substantive and procedural dimensions. The nature and strength of the norms governing the substantive dimension (prices, liability for defective goods, allocation of transport costs, insurance, and financial and credit arrangements) and the procedural dimension (locus of regulation, methodology of rule creation, and dispute settlement) are analyzed over three historical phases. These three periods are the medieval period, from the eleventh to the sixteenth centuries, the early modern period, from the seventeenth to the nineteenth centuries, and the modern period in the twentieth century. The regime norms are found to exhibit significant continuity over time, although there has been considerable variation in the rules. The strength of the regime has also varied over the three phases. Three theoretical perspectives (structural realism, functionalism, and sociological analysis) are evaluated for their relative ability to explain the origin, evolution, nature, and strength of the regime. Each perspective is found to offer important insights, but a synthesis of approaches is necessary to capture the complexity and richness of the regime's evolution. Structural realism does not account for the origin of the regime and is of limited assistance in explaining the strength of voluntary standards. It does, however, explain the influence that states' concerns for political/legal autonomy have had on the regime and offers a reasonably good account of the roles that the United States and the United Kingdom have played in the evolution of the regime. Sociological analysis assists in accounting for the origin and nature of the regime, but it does not provide a comprehensive theory of cooperation. Reference to the other approaches is required as a supplement to sociological analysis. Functionalism provides the best explanation of the origin and nature of the regime. However, it is unable to account for variations in the strength of the regime over the three historical periods. Reference to the influence of changing structures of political authority and to the ideas, knowledge, and values of the major commercial actors is necessary as a supplement to functional analysis.

This thesis consists of three essays, which focus on different aspects of economic policy issues faced by developing and emerging market economies. The first essay explores the effect of monetary policy credibility on exchange rate volatility in a small open economy, even if the exchange rate is not an explicit target set by the monetary authority. Using an open economy framework modified from Gall and Monacelli (2005) and Walsh (2006), it shows that monetary policy credibility helps to stabilize the exchange rate as supply and demand side shocks hit the domestic economy. The monetary policy credibility can be achieved by the monetary authority's commitment to certain rules aiming for output/price smoothing. In the empirical analysis inflation targeting is used as a proxy variable for monetary credibility. The GARCH model of selected South-East Asian countries indicates that countries with inflation targeting policies have exhibited reduced exchange rate volatility when other factors are controlled. / The second essay looks at FDI inflows into developing economies. Two distinctive differences of FDI inflows between developed and developing economies are entry modes and evidence of government regulations. This essay investigates the incentives of FDI flows in terms of cost-saving merger, fixed cost of entry and the role of government policies. In particular it shows that, if the cost-saving effect is large and the government intervenes, the foreign firm will consider the FDI through either Greenfield or Brownfield, which corresponds to the situation for FDI flows into developing economies. Otherwise, the foreign firm will only consider Brownfield or staying outside, which stands for the developed economy case. Since one remarkable feature of the FDI flows into developing countries is the benefit of cost-saving from low labour costs, this essay takes this effect into account and provides insights for economic "outsourcing". The multi-stage sequential game model presented in this chapter provides comparable results for the pattern of the FDI flows affected by regulation and institutional factors, which are not addressed by existing literature. Finally, it reveals some intuition and feature of a developing economy where the government regulations on FDI flows are more often observed. / The third essay deals with the resource/revenue reallocation within powerful groups in the economy and the impact of the rent-seeking behavior of these groups on the economic growth and the social welfare. In particular, it introduces a dynamic model of resource-grabbing by status-conscious agents, i.e., agents value not only their absolute consumption levels, but also the relative status within his/her reference group. The purpose of this paper is to explore the effect of the "positional externalities" on the urge to seek rent and to connect the "tragedy of the commons" problem with relative consumption. The model shows that the greater is agents' concern about their relative status, the more aggressively they tend to behave. Consequently, the social welfare is lower because the growth rate of the public asset is reduced due to higher extraction rate. After introducing heterogeneity, it shows that the social welfare decreases as the distribution of status-consciousness among agents widens. Finally, it provides some policy suggestions that the government might consider to achieve a second best social outcome.

Separate essays on entrepreneurship, joint venturing, and trade comprise this thesis. The emergence of entrepreneurship is common in the real world but relatively less so in classical economic models. If industry incumbents are attributed with full rationality and perfect foresight, then there are few, if any, profitable opportunities left for new entrants (entrepreneurs) to exploit. This essay explains how entrepreneurs can emerge in a dynamic world when firms must choose between a technology strategy that is either statically or dynamically efficient. A model is developed which shows how such opportunities for new entry can occur when incumbents are caught in a Prisoners’ Dilemma game involving technology strategy. A relevance measure and policy implications are then explored. Joint ventures, especially of the R&D type, are becoming increasingly important as a way to gain needed technological and market competencies. Unfortunately, many joint ventures have the characteristics of a Prisoners’ Dilemma. Firms may cooperate or defect in the venture. If contracts, side-payments, and third-party verification of the venture outcome are unavailable, then the dominant solution to the Prisoners’ Dilemma (mutual defection) results. This paper proposes the use of an ex-ante auction to obtain a Pareto-improvement for these ventures. A Pareto-improvement is assured when non-transferable costs and benefits of firms are not conditional on joint venture strategies. When this condition is not met restrictions are required to obtain the Pareto-improvement. The problem of trade between countries that share an international open access resource is becoming significant as the world reaches the limits of critical shared resource stocks. It is modelled as a world with one primary factor, two intermediate goods, one final good (harvested from the open access resource), and two nations where it is assumed that either the trading takes place over one stage (nations are price-takers), or two stages (nations have market power). Imperfect competition and open access generated externalities affect the trading efficiency. To maximize world welfare this essay recommends subsidizing R&D where comparative advantage exists, and creating international agreements to ensure the one-stage game structure is used when trading.

Separate essays on entrepreneurship, joint venturing, and trade comprise this thesis. The emergence of entrepreneurship is common in the real world but relatively less so in classical economic models. If industry incumbents are attributed with full rationality and perfect foresight, then there are few, if any, profitable opportunities left for new entrants (entrepreneurs) to exploit. This essay explains how entrepreneurs can emerge in a dynamic world when firms must choose between a technology strategy that is either statically or dynamically efficient. A model is developed which shows how such opportunities for new entry can occur when incumbents are caught in a Prisoners’ Dilemma game involving technology strategy. A relevance measure and policy implications are then explored. Joint ventures, especially of the R&D type, are becoming increasingly important as a way to gain needed technological and market competencies. Unfortunately, many joint ventures have the characteristics of a Prisoners’ Dilemma. Firms may cooperate or defect in the venture. If contracts, side-payments, and third-party verification of the venture outcome are unavailable, then the dominant solution to the Prisoners’ Dilemma (mutual defection) results. This paper proposes the use of an ex-ante auction to obtain a Pareto-improvement for these ventures. A Pareto-improvement is assured when non-transferable costs and benefits of firms are not conditional on joint venture strategies. When this condition is not met restrictions are required to obtain the Pareto-improvement. The problem of trade between countries that share an international open access resource is becoming significant as the world reaches the limits of critical shared resource stocks. It is modelled as a world with one primary factor, two intermediate goods, one final good (harvested from the open access resource), and two nations where it is assumed that either the trading takes place over one stage (nations are price-takers), or two stages (nations have market power). Imperfect competition and open access generated externalities affect the trading efficiency. To maximize world welfare this essay recommends subsidizing R&D where comparative advantage exists, and creating international agreements to ensure the one-stage game structure is used when trading.

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In international economics literature, different variants of the Nash equilibrium have been used to formulate strategic and retaliative behavior. However, the negotiation process underlying the Nash equilibrium does not capture the notion of retaliation properly. We use the "contingent threat situation" (Greenberg, 1990) to reformulate three different international economic environments. / First, a two-country, two-commodity model of trade is considered to reformulate the tariff retaliations. It is known that tariff retaliations lead to a Nash equilibrium outcome, a non-free trade outcome. We show, in the framework of the "theory of social situations", that the free trade equilibrium is supported by a "stable standard of behavior". / Second, the basic two-country, single commodity model is employed to formulate the interactive and retaliatory policies regarding the choice between foreign investment and immigration. Considering three different strategic environments, we investigate the outcomes supported by "stable standards of behavior" under these strategic scenarios. We also provide a critical examination of Jones-Coelho-Easton's proposition (Jones, Coelho, and Easton, 1986). / Third, a simple model of international debt is formulated using a strategic form game. In the game, a country in financial crisis and on the verge of default is requesting a new loan, and a bank, with exposure to the foreign country's debt, contemplates whether it should issue the new loan. We show that "issue a new loan" and "not default", a Pareto optimum pair of strategies, is stable. Interestingly, we get this result by using a non-cooperative negotiation process, offered by the "individual contingent threat situation".

No abstract available. / Thesis (M.A.)-University of KwaZulu-Natal, Pietermaritzburg, 2005.

Economic migration has become a global trend. The movement of people and goods within and beyond territorial boundaries is a phenomenon synonymous with the twentieth century. In the Southern African region, migratory processes were accelerated by the 19th century mineral discoveries in the Cape and Transvaal. Mozambique, particularly its southern regions, was drawn into the South African- dominated economy in a service capacity, as the supplier of migrant labour, principally for the Transvaal. The mineral wealth and the development it generated made South Africa the dominant economy in the region, drawing in migrant labour from surrounding states. Today, mining activities and the Transvaal are no longer the main attraction for many Mozambicans who enter South Africa, as they have spread throughout the country since the ending of apartheid. This study is focused on Durban, where a combination of push and pull factors continues to impel Mozambicans to arrive in search of economic opportunities. The majority, who are from the rural areas of the southern provinces, without education and formal qualifications, enter South Africa illegally and without documentation. Migrants use informal networks and the informal sector, as a means of overcoming the various obstacles to entry imposed by the states on both sides of the frontier, and their inability to compete for jobs in the formal sector. Economic and social integration of Mozambicans in Durban has evolved around informality and it can be argued that if the Mozambicans in this study have achieved a certain degree of integration, this has been due to successful mobilization of resources provided by informal networks and the informal sector. Linguistic affinities and geographical proximity also play a significant role in the process. The study looks at various informal economic opportunities exploited by Mozambicans, including an expanding cross border- trade based on high mobility between the two countries. It focuses mainly on the varied ways Mozambicans in Durban achieve a degree of economic and social integration. Literature and debates on international migration and on informality lay a foundation for the approach to the study, which is based on an historical overview of migration between the two states and fieldwork in Durban and southern Mozambique. / Thesis (M.A.)-University of KwaZulu-Natal, Durban, 2008.